What role does the U.S.
government currently play in agriculture?
Like many things in the 20th century,
U.S. agriculture has undergone a huge transformation. There are new practices, advanced machinery
and farms have drastically changed their structure. It may seem strange then to learn that most
of agricultural policy is built around an act that was passed in 1933. The Agricultural
Adjustment Act was the first act passed that gave aid and support to
farmers. The U.S. was in the beginnings
of being crippled by the Great Depression and the government knew that farmers
were some of the hardest hit.
Agricultural policy has evolved and changed since then. Instead of providing high price supports the government
has switched to direct government payments.
These payments are paid to farmers when market prices fall below a
certain price, determined by historical production levels.
Are the government
programs right?
This issue has been a hot topic for years and
especially during the past election.
Some feel that farm subsidies are too high and that government doesn’t
have the money to support them. I
believe however that they are critical to stabilizing businesses in an
extremely variable market. Prices are going up in some industries but as grain
prices rise for example, so does cost of feed, which will cause issues to the
livestock industry. The world can’t
survive without food so farming operations and this government program, in my
mind, should be a pretty high priority for the U.S.
http://growthforce.org/images/uploads/home-flag.jpg
For more information
you can see the USDA website: http://www.ers.usda.gov/media/259572/eib3_1_.pdf
How have government farms
subsidies impacted the United States and the world?
Americans see the impact of subsidies every night
when they sit down at their dinner table to eat supper. Farm subsidies provide farmers the buffer
they need when prices are too low and farms would otherwise go bankrupt. Subsidies have allowed the U.S. and the world
to have food all year. A social impact
on the United States and the world is that farm subsidies get a lot of political
criticism. With the government debt rising,
many are pointing their finger at farm subsidies and calling for them to be no
more. Below you can see a cartoon published
to show what some think of the “over-spending” on farm subsidies.
What would be the
implications of eliminating subsidies?
Though
many could argue several other implications, or even argue that these are not
valid, I believe that these are the ten best implications of the elimination of
farm subsidies.
The
following come from Dr.Sumner’s report: http://aic.ucdavis.edu/research/farmbill07/aeibriefs/20070515_sumnerRationalesfinal.pdf
1. Chronic low farm prices.
2. Chronic high variability in farm prices.
3. Farm and rural poverty.
4. Chronic high variability in farm income.
5. Chronic low rates of return for farm investments.
6. Without subsidies, rural asset values would fall
or otherwise be too low.
7. Chronic slow rural development, dwindling rural
populations.
8. Low environmental quality of rural landscape and
environmental spillovers outside rural areas.
9. Chronic imbalance of power favoring commercial
buyers of farm goods over farmers.
10. Without farm subsidies, food prices for
Americans would be too high.
What is the CAP?
The CAP began operating in 1962, with the Community
intervening to buy farm output when the market price fell below an agreed
target level. How it differs from the
United States subside program is that the CAP program is for the entire
European Union. This means that some
countries are benefiting more than others.
Also, every countries production is different so it can sometimes be
difficult to allocate the funds.
Is the CAP viewed in
the same light as U.S. subsidies?
I would have to say for
the most part it would appear so.
Subsidies are a big debate any time there is economic unrest and in
Europe there is no exception. The CAP program is blamed for widening the gap
and not allowing developing markets to compete in the global market. The program keeps farms going and that makes
it hard for emerging markets to enter the market at a competitive price. As
with U.S. subsides, there is discussion of doing away with them and even CAP
supporters say that reforms do need to be made.
What’s
the latest news regarding the U.S. Farm Bill?
With the coming of a
new year, like many programs, the Farm Bill is in jeopardy of expiring. If the bill would expire it would mean
millions of dollars lost. It also would
mean that the law would revert to the 1949 law, which would be high price
supports. Those high price supports
would mean sky rocketing prices for consumers.
However, crisis was adverted and an extension was granted.
